WBCS.LIVE practice question

In the context of the Indian banking system, what does the 'CRR' strictly stand for?

Solve this multiple-choice question and check the correct answer with its explanation below.

Answer options

  1. Cash Reserve Ratio
  2. Current Repo Rate
  3. Credit Rationing Rate
  4. Capital Return Ratio

Correct answer and explanation

Correct answer: Cash Reserve Ratio

Explanation: āœ… Correct Answer: A) Cash Reserve Ratio šŸ“š Explanation: CRR stands for Cash Reserve Ratio, which is a highly crucial monetary policy tool managed by the Reserve Bank of India. It legally mandates that all commercial banks must keep a certain specified percentage of their total deposits strictly as liquid cash with the RBI. By increasing the CRR, the central bank can rapidly suck out excess liquidity from the economy to control inflation.